Voom: Back From the Tomb

A nearly three-year-old,multibillion-dollar contract dispute between
EchoStar Satellite LLC and Voom HD
Holdings could go before a jury soon, shortly
after the judge in the case dealt the satellite
giant a blow to its defense.

A hearing on the $2.5 billion breach-ofcontract
suit is scheduled for Dec. 9 in New
York State Supreme Court in Manhattan,
at which a trial date could be set. Once that
happens, jurors are expected to get an earful
from presiding Judge Richard Lowe, who on
Nov. 3 issued a scathing opinion on the matter,
stating that EchoStar has destroyed evidence
and engaged in “egregious” conduct.

Lowe is concerned about EchoStar’s practice
of erasing employee e-mail messages after
just seven days, documents that he said in his
opinion could have helped Voom in its case.
As a result, he granted Voom’s request for an
adverse inference instruction, which essentially
entails the judge informing the jury that
EchoStar had knowingly destroyed evidence.

That is pretty rare and could be a devastating
blow to EchoStar’s defense, according to
several attorneys not connected with the case.

“This is a big deal,” said Brant Martin, a
partner in the Dallas law firm Wick Phillips
Gould Martin. “Basically what it is, is the
court telling the jury that you can assume
that the evidence EchoStar destroyed helped
Voom’s case. The practical effect of that is, juries
sometimes take that as a quasi instruction
from the judge that Voom is in the right.”

“It automatically puts the attorneys’ and
the defendants’ credibility at issue,” said J.
Sean Lemoine, also a partner at Wick Phillips.
“The jury won’t know exactly what they
did wrong, but [they’ll] know that they did
something wrong and that the judge is not
happy about it.”

A trial would bring what has been a long
and drawn-out battle closer to resolution.
The dispute stems from a 2005 agreement
where EchoStar agreed to purchase Voom’s
satellite assets for about $200 million. Echo-
Star, now Dish Network, also agreed to carry
21 Voom channels on its satellite TV service
for 15 years. EchoStar canceled the agreement
in 2008, claiming Voom fell short of a
promised investment in the service, which
Voom denies. Voom was formed in 2003 by
Cablevision chairman Charles Dolan and
is still part of its Rainbow Media programming,
unit which distributes some of its
channels internationally.

Representatives from both Dish Network
and Cablevision declined to comment.

It wasn’t the first time that EchoStar had
been accused of misconduct. Voom claims
that EchoStar had been sanctioned or criticized
on several other occasions in litigation
over the past several years.

Lowe added that he would stop short of
striking EchoStar’s responsive pleadings
in the suit — the maximum penalty, which
would effectively render a judgment against
EchoStar by default — but he only did so because
he believes Voom has other compelling
evidence to back up its claims.